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Significance and Current Situation
The German SME sector is strongly characterized by owner-managed small and family-owned businesses. According to estimates by the Institute for SME Research in Bonn, approximately 190,000 companies will be facing a succession by 2026, a significant proportion of which operate in the retail and skilled trades sectors. About half of these businesses are unable to find a suitable successor. Both sectors are characterized in particular by deep local roots and person-specific expertise, which further complicates the succession process.
Economic Slowdown and Succession Barriers
The economic slowdown, which has been noticeable since 2023, is having a direct impact on the willingness to take over a business. Rising financing costs, declining purchasing power, and uncertainties about future earnings are dampening the interest of potential buyers. Business models are increasingly being called into question, particularly in the retail sector, which is under pressure from structural changes resulting from online platforms such as “Amazon,” the disappearance of department store chains like “Galeria-Kaufhof,” and shifting consumer habits. Many succession processes are being delayed or are failing due to unclear economic prospects.
Demographic Change and the Shortage of Skilled Workers
Demographic change is one of the main causes of the shortage of successors. Numerous business owners from the baby boomer generation are reaching retirement age, while the number of young people seeking to become self-employed in the skilled trades or retail is declining. According to the German Confederation of Skilled Crafts (ZDH), about one-third of skilled trades businesses remain without a succession plan (see ZDH, 2024). In addition, the appeal of self-employment is declining relative to salaried employment—primarily due to the perceived financial risk and the increasing bureaucratic burden.
Impact on Business Valuations and Sale Prices
These developments have a direct impact on the valuation and marketability of businesses. The lack of interested buyers is leading to a buyer’s market in many areas. Smaller businesses in particular, which are heavily dependent on the owner, often achieve, at best, their net asset value. Uncertainties regarding future revenue, as well as investment needs for digitalization and modernization, also reduce business values. As a result, business transfers are increasingly structured in phases or combined with alternative financing models.
Support from Specialized Consulting Firms
Specialized consulting firms are becoming increasingly important in addressing these challenges. Firms such as EUROCONSIL help business owners structure the succession process—from determining the company’s value and approaching potential buyers to providing support during contract negotiations. They act as neutral intermediaries who bridge the economic and emotional aspects of succession. Especially for smaller businesses without an internal successor, such consulting firms offer market knowledge, valuation expertise, and organizational support
The Emergence of Craftsman Groups Led by Investors
An increasingly common trend in the succession landscape is the creation of trades groups by investors. Private equity firms and family offices acquire several smaller trades businesses within a specific industry—such as building services, plumbing, heating, and HVAC, or electrical engineering—and consolidate them under a single umbrella. The goal is to achieve economies of scale, improve purchasing terms, standardize digital administrative processes, and establish a stronger market position.
On the one hand, these “buy-and-build” strategies can secure succession solutions by offering businesses without an internal family successor the prospect of a takeover. On the other hand, they alter the traditional structure of the skilled trades, which has historically been characterized by regional autonomy and personal customer relationships. Critics fear an increasing industrialization of the skilled trades and a drift away from established business structures, while proponents point to the opportunities for professionalization, increased investment capacity, and job security.
Prospects and Options for Action
Several factors are crucial for successful business succession: early planning (ideally 3 to 5 years before the handover), a realistic business valuation, the involvement of external expert advisors, and the use of public funding programs. Hybrid succession models, in which the transferor and successor work together for a defined period to ensure the transfer of knowledge and customer relationships, are also promising.
Conclusion
Business succession in the German retail and skilled trades sectors has reached a critical juncture. A weakening economy, demographic change, and a shortage of successors are threatening the very existence of numerous businesses. At the same time, professional succession support, government funding instruments, and new investor models—such as tradespeople’s groups—offer realistic prospects. Specialized consulting firms like EUROCONSIL help to make succession processes efficient and transparent, thereby ensuring the long-term continuity of small and medium-sized enterprises in Germany.
